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Investment Philosophy 
Country Allocation. The National City
Investment Management Company international equity investment team believes
that country allocation decisions are the paramount driver of international
equity portfolio returns. Countries with undemanding valuations, strong
competitive advantages, and improving sentiment provide excellent opportunities
for investment.
Stock Selection. Within this overall
context of country allocation, individual securities selected for international
portfolios reflect a growth and momentum stock selection style. We believe
companies with strong earnings growth momentum and operating profit margins
that generate strong positive cash flows will deliver superior price appreciation.
Investment
Process
Country allocation decisions are based on four factors:
| 1 |
Forecast Price/Earnings
Ratios |
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| 2 |
Economic Imbalances |
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| 3 |
Relative
Financial Market Strength
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| 4 |
Risk Control
Parameters
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Stock selection decisions reflect competitive positions
and valuation parameters, based on five factors:
| 1 |
Earning and
Revenue Growth > Peer Group |
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| 2 |
Operating
Profit Margins > Peer Group |
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| 3 |
Strong Cash
Flow Generation
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| 4 |
Strong and
Positive Money Flow Patterns
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| 5 |
Market Capitalization
> $1.0 Billion
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Portfolio
Construction
If a sector represents 10% or more of the MSCI EAFE Index comparison,
the normal maximum portfolio allocation will be the lesser of 3.0X the
benchmark's allocation or 50%. The normal minimum portfolio allocation
will be 25% index weighting. If the index sector weighting is 10% or less,
the normal maximum portfolio sector allocation will be the greater of
3.0X index weighting or 5% with a minimum 0% allocation. Individual issues
are limited to 5% of total portfolio assets at time of purchase. Portfolios
will normally hold more than 60 securities, with a 5% maximum cash limitation.
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